Data and mobile money help MTN Uganda combat falling revenues

Telecoms

Market diversification into new products especially data and mobile money as new key revenue bases has partly helped telecoms maintain business in a tough year.

MTN Uganda Chief Executive Officer Themba Khumalo has conceded that increased competition has impacted on the company's overall revenue base but the telecom firm has maintained market leadership.

Without disclosing the extent of the revenue decline, Khumalo said in a year where a renewed price war has seen calls drop from an average sh11 per second to just sh3, revenue from Mobile money now subscribed to by 1.4 million out of the total 6.4 million MTN subscribers has been significant.

The market currently has seven players, UTL, MTN, Warid, Orange, I-Telecom, Smile and Airtel with price structures still having a big impact. In the last few months, the top three players, MTN and UTL have faced the heat from the models of the Asian giants Warid and Bharti who largely go for price cuts hoping to harvest from lower prices but larger volume sales.

Meanwhile Orange and Foris Telecom have significantly boosted the market data contributing to both the availability of bandwidth and pricing. Foris chief executive, Moshe Mitz says their focus on extending data to homes and mobile is key to extending penetration. Zain's Zap now rebranded Airtel Money is one of three money transfer services alongside UTL Msente.

"What is encouraging is that this is an African innovation," said Khumalo speaking on what the telecom market may look like in the years ahead. "I think that price wars will still be there, but there will be a lot more focus on data."

But despite the industry slashing prices, penetration remains very low at about 35%. That means out of every 100 people, about 35 have access to phones. Compared to South Africa with 110% penetration (people hold several phone lines) and Swaziland at 80%, Ugandan operators still have high growth space.

Yet Khumalo said these statistics should be read with the knowledge that about 50% of the population are below 15 years and have no spending power. "In terms of addressable market, we have gone way above 70% of penetration, we have done well as a country," said Khumalo.